Ukraine is making modest progress in creating favorable conditions for businesses.
Altogether, the country climbed five positions in the World Bank’s Ease of Doing Business rating and is currently at 71st place. To compare, in 2012 Ukraine was 152nd out of 183 countries.
But this is still far from ideal, even compared to Ukraine’s neighbors: Moldova is at 47th, Belarus at 37th, Russia – 31st. There’s still much work to do.
Here are the year’s developments in the top sectors in Ukraine:
Agriculture
Ukraine has produced a record high 91.8 million tons of grain this year, according to the Ukrainian Grain Association. Almost 60 percent was exported to Indonesia, Saudi Arabia, China and the Netherlands.
Ukraine is the global leader in sunflower production and exports. Last year it exported 5.4 million tons earning $4 billion.
However, Ukrainian honey exports decreased by 37 percent to 33,700 tons during the first 10 months of 2018 in comparison to last year. Previously, Ukraine was ranked fifth globally in terms of honey production and third in exports, according to United Nations.
Ukraine’s land moratorium still remains a hot topic. The World Bank estimates billions of dollars in losses annually due to the lack of a competitive market for buying and selling land.
Financial recovery
For the first 10 months of 2018, banks in Ukraine made Hr 15 billion, or some $535 million in profits, a record amount in the past decade, according to the National Bank of Ukraine.
Ukraine’s currency law that has been passed this year as well and is going to take effect in February; it is expected to have substantial positive impact on the economy.
Additionally, in November the central bank announced that Chinese payment system UnionPay International, the world’s biggest payment system both in terms of cards issued and volume of operations, is entering the Ukrainian market.
Ukraine also took a fundamental step in easing its tax payments by introducing an automated and online value-added tax refund system.
Now, Ukraine ranks 43rd among 190 countries in the World Bank’s tax payment index, part of the Ease of Doing Business Ranking. The country jumped by 41 positions in one year.
Ukraine has mostly cleaned its banking sector although there are still some banks that are considered to be toxic. A potential blow to the state involved Ukraine’s largest bank PrivatBank, whose previous owners, oligarchs Ihor Kolomoisky and Gennadiy Boholyubov, were accused of defrauding the bank of $5.5 billion for years before the Ukrainian government nationalized it in 2016. The government lost in a London High Court case and is now suing the previous owners through a Swiss court.
A worker monitors the loading of grain into a truck in Kharkiv Oblast on July 25, 2018. Ukraine has produced a record high 91.8 million tons of grain this year, according to the Ukrainian Grain Association. Almost 60 percent was exported to Indonesia, Saudi Arabia, China and the Netherlands. (UNIAN)
Energy development
Another vital issue for Ukraine involves natural gas, as the country is striving to become energy independent from Russia, a country that has been waging war in Ukraine for the past five years.
In November, Ukraine’s daily gas production increased to 59 million cubic meters, a record high since 2014.
But the total amount of extracted gas in 2018 – 19.1 billion cubic meters for the January-November period – will hardly exceed the previous year. This is still not enough to cover the country’s domestic demand of 32 billion cubic meters per year.
But Ukraine’s gas sector has faced a crucial victory when the Stockholm arbitration court ordered Russian Gazprom gas monopoly to pay Ukrainian oil and gas monopoly Naftogaz $4.63 billion for the failure to deliver transit gas.
To further Ukraine’s independence, encouraged by lucrative tariffs, renewable energy projects this year again showed a positive trend: 428 megawatts have been added as of Oct.1, a 50 percent increase compared to last year, according to Ukrainian Association of Renewable Energy.
Of those 428 megawatts, 85 percent were added due to solar power plants.
This figure is expected to more than double next year.
Momentum
Ukrzaliznytsia, Ukraine’s state-owned monopoly, controls the railroad transportation in the country, and is putting a plug for agriculture companies to deliver their grain.
Currently, the company has 1,758 cargo locomotives, but only half of them work — the rest are broken or under repair.
The state monopoly ordered 30 diesel General Electric locomotives and signed a $1-billion contract with the American gian in 2018. Half of them have been delivered, while the rest are expected in 2019. However, the required number of locomotives to cover the shortage is more than ten times —anywhere between 300 to 500.
At the same time, in November, The European Bank of Reconstruction and Development announced that it would give Ukrzaliznytsia a $150 million loan to purchase around 6,500 new gondola-type wagons.
Ukraine’s roads are no less important.
The road repairs significantly increased in 2018, as well as its financing – $1.3 billion were spent to fix 3,800 kilometers of roads in 2018, 80 percent more than in 2017, according to Ukraine’s Infrastructure Ministry. The ministry originally planned to repair 4,000 kilometers of highways and spend $1.9 billion in 2018.
To compare, in 2014, only 102 kilometers of roads were repaired.
Also, the long-awaited launch of the double-track Beskyd tunnel in Ukraine’s Carpathian Mountains integrates the country’s infrastructure with the pan-European transport network Corridor V, stretching from Venice to Slovenia, Hungary and now Lviv.
It will take on 60 percent of rail traffic between Ukraine and the European Union, according to the European Bank for Reconstruction and Development, which provided $40 million in loans for the project.
Ukraine’s sea ports, however, have experienced a decrease in transit cargo turnover of 11 percent compared to last year, down to 8.6 million tons.
But that figure could easily change if Ukraine’s port tariffs – near 20 percent – wouldn’t be so high.
Air transportation has shown some significant results. Over 19 million people traveled through Ukraine’s airports from January through November, according to the Infrastructure Ministry. Read more on page 7.
IT keeps booming
Ukraine’s booming IT sector is perhaps the most successful one in Ukraine bringing an estimated $4 billion to the country’s economy. Read more on here.
